Whether you are single or coupled in the D.C. metro area, you will potentially be in the position of making a major decision: Do I (or we) rent or purchase a home? From an economic perspective alone, the D.C. metropolitan area tends to be cheaper in the long run to own than to rent.
However, you must bear in mind that it is dependent upon many factors and there certainly are exceptions to this financial generality. Here are some of the pros and cons of both home ownership and renting.
And, if you happen to be searching for a new place to live with a partner, you need to keep relationship issues in mind as well.
Advantages of Renting
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Mobility: Given the transient nature of many D.C. area residents, renting allows flexibility in terms of job relocation or other changes that may involve the need to move quickly. Perhaps you decide to have a child, or get that dog you’ve always wanted, or have an in-law moving in. Even though you may need to break a lease (and maybe even lose money), you will be able to do so.
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Little Responsibility: As a renter, you are not responsible for high costs of repairs or appliance replacement.
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Savings: Given the fixed cost of rent, and the knowledge that you won’t be blindsided with expensive repairs, you will be able to use additional funds to invest however you’d like.
Disadvantages of Renting
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Restrictions: You cannot renovate the property unless you have permission from the owner.
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Delays in Repairs: Since you are not the one orchestrating the repairs, your leaky toilet may take longer to fix since you may be dealing with a rental agent or a landlord who procrastinates.
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Unexpected Changes: Your rent will stay the same for the length of the lease, but when it expires you may be hit with an increase.
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Pet Issues: In addition to paying a security deposit for yourself, you may have to pay an additional security deposit and/or monthly fee for your beagle rescue. Or you may find that the gorgeous house you’d love to rent has a strict “No Pets” policy.
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No Tax or Equity Perks: When you own a home you create equity and get tax deductions. This is not the case with renting. Your rent becomes “dead money” or as some would say, it is “flushed down the toilet.”
Advantages of Owning
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Privacy: When you own a home, landlords and other unannounced repair people will not be coming into your home. As an owner, you are the only one with the keys.
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Freedom to Decorate and Renovate: As an owner, you get to choose the fence, room colors, deck structure, or whatever you’d like—of course within the bounds of zoning laws and HOA policies.
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Extra Income. You may rent out your entire home or a portion thereof whenever you’d like (again, playing by the rules, needless to say).
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Build Equity. As you pay more of the principal off, you create equity. That enables you to refinance your home for extra cash or to obtain a home equity loan or line of credit to pay for major repairs, college, or even a new car.
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Increase your FICO score. As the years pass and you’ve been responsible with your payments, your credit score will climb.
Disadvantages of Owning
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High Upfront Costs: You will need to come up with a large down payment to make mortgage payments affordable. In addition, you will have needed to work on your credit history ensuring that it’s in great shape.
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High Maintenance and Repair Costs: It will be important to have an emergency fund for both expected and unexpected repairs and replacements, not to mention maintenance.
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Less Mobility: Once you commit to home ownership, it’s difficult to just “up and leave” for that great job on the West Coast.
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Less Than Expected Profits: Once you do decide to sell, you may be disappointed with the profits you receive. It all depends on the market at the time.
Be sure that you weigh all of the options. Everyone’s situation is unique. And, here’s a suggestion for couples that are deciding on renting versus buying. Make a chart with the above categories, brainstorm, and come up with your own lists of advantages and disadvantages for either renting or buying. Be sure to think about the future and see what you come up with. Just the process of talking about the pros and cons may very well help you feel more connected.